A finite set of equilibria for the indeterminacy of linear rational expectations models

Jean-Bernard Chatelain and Kirsten Ralf

This paper demonstrates the existence of a finite set of equilibria in the case of the indeterminacy of linear rational expectations models. The number of equilibria corresponds to the number of ways to select n eigenvectors among a larger set of eigenvectors related to stable eigenvalues. A finite set of equilibria is a substitute to continuous (uncountable) sets of sunspots equilibria, when the number of independent eigenvectors for each stable eigenvalue is equal to one.

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Year of publication:	July 25, 2014
Authors:	Chatelain, Jean-Bernard ; Ralf, Kirsten
Publisher:	[Kiel : ZBW
Subject:	linear rational expectations models \| sunspots \| indeterminacy \| multiple equilibria \| matrix Riccati equation \| Rationale Erwartung \| Rational expectations \| Sunspots \| Gleichgewichtstheorie \| Equilibrium theory \| Gleichgewichtsmodell \| Equilibrium model